Social Media MC - Original Post 2

Groupon For Business 

Everyone likes a deal. The words “free”, “discount” and “buy one, get one free” can draw customers in. These concepts are what collective buying sites, for example Groupon, have built their business models around. 

Groupon is a deal-of-the-day website that features discounted gifted certificates at local or national companies. In other words, it is the social buying site and service that offers it's members a deal a day by email. It was  launched in November 2008, and the first market was Chicago.

Here are two videos helping to learn about Groupon.

Video #1: What is Groupon?

Video #2: How it works?

Forbes Magazine describes it, "Groupon, a name that blends "group" and "coupon," presents an online audience with deep discounts on a product or service. Act now, says the pitch: You have only so many hours before this offer expires. That's a familiar come-on, but it's coupled with a novel element: You get the deal only if a certain number of fellow citizens buy the same thing on the same day. It's a cents-off coupon married to a Friday-after-Thanksgiving shopping frenzy."

"What's in it for the vendor--which might be a museum, a yoga studio or an ice cream shop? Exposure. Since the resulting revenue is not only discounted but shared (typically, 50/50) with Groupon, the vendor may scarcely break even on the incremental sales. But it now has customers who might never have thought of patronizing the business. Groupon gets its offers in front of eyeballs by buying ad space through Google and Facebook and via the word of mouth of its 13 million subscribers."

To sum, if a certain number of people sign up for the offer, then the deal becomes available to all; if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. Groupon makes money by keeping approximately half the money the customer pays for the coupon.

Groupon is expanding to offer more services than deal-a-day emails. They've introduced "Groupon Now", a way that small business merchants can offer real-time deals to customers/clients and they're expanding into other areas. And I found a video showing the difference about Groupon Now.

Businesses use Groupon to offer deep product or service discounts of 50% or more. Groupon will introduce the business to an entirely new set of customers. Then it opens an online, time-sensitive offer to potential customers as long as a certain amount sign on to participate. The result is lots of happy customers who get to enjoy a fantastic deal at your place of business. It sounds really nice. 

In my opinion, Groupon has limits. From Grouponwork data, the deals are often focused on the health, fitness and beauty markets. This indicates that professional services, like salons and restaurants, often are very successful with group buying deals because the services are short-term or one-off purchases. Industries with longer term commitments may not be good fit. However, a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be dissatisfied, or that there won't be enough product to meet the demand. 

Groupon might give a new business good start, like customers, or reputation (if everything work smooth). However, long-term development requires more than good deals.

References:

http://en.wikipedia.org/wiki/Groupon
http://online.wsj.com/article/SB10001424053111903791504576589211214409214.html
http://www.groupon.com/about
http://www.youtube.com/user/groupondotcom/videos?view=0